Casey B. Mulligan and the Competency Problem in Economics

The other day on twitter I had a conversation I’ve had many times. An economist defending price theory said that

Usually, this wouldn’t be very notable. I have lost track of the number of PhD economists I have caught making this mistake. But as I looked into this person’s position within the field of economics, I thought it might be useful to discuss his error in detail and the error’s probable impact on his work and his teaching. I think this is also an excellent example of how even relatively notable economists often don’t really understand the theories they themselves work with.

Who is Casey B. Mulligan? Viewing his profile led me to his personal website, where he promotes his new book. Wikipedia contains links to his CV. He is a professor of economics at the University of Chicago, widely considered to be one of the best economics departments in the world. He is obviously well connected in the research and policy world, and undoubtedly teaches many students every year. He was the Chief Economist of the Council of Economic Advisors under President Trump.

Ideologically his work is the type of thing that anyone who is not right wing will undoubtedly find distasteful. Casey Mulligan has written in multiple articles that social assistance programs, such as food stamps, prolonged the great recession. He has written that Obamacare disincentivizes work, and he opposes paid sick days.

Opposing any kind of benefits for those who are unemployed or sick can certainly seem morally reprehensible. No doubt Casey Mulligan would appeal to economics to justify his positions, which makes the fact that he has made an embarrassing economic error so appalling.

I have outlined already why supply and demand requires perfect competition, in a post going over the math behind supply curves, and a post clarifying common misconceptions about supply curves. While introductory economics textbooks often do not emphasize the dependence of supply curves on perfect competition, they typically do say, for example, that monopolists, and companies in monopolistic competition, do not have supply curves. In addition, more advanced economics texts typically include the same arguments I outlined in previous posts. Even right wing economists, such as Milton Friedman, are well aware that a supply curve only exists in perfect competition. For example, on page 176 of his book Price Theory, Friedman writes “We must remember that a supply curve is a meaningful concept only for a competitive industry.”

I mention just how common this argument is, to stress how absolutely unbelievable it is that someone can be a professor at an economics department, supposedly one of the top departments in the world, and still make such a basic error. Doing so requires not understanding econ 101 well, either not having read or not having understood more advanced texts, and never having really thought about the concepts of supply and demand at anything other than an incredibly superficial level.

How did Casey B. Mulligan respond when I called him out? He first accused me of not having read a specific textbook he cites, and asked me to call out where it goes wrong. The textbook he mentioned is called Chicago Price Theory, and I took the opportunity to read it. However, the textbook does not use supply curves for imperfect competition! Casey Mulligan has clearly not understood the text he claims supports his point. The textbook spends most of its time treating competitive markets, asserting that they are a good approximation to real markets. A single citation is given to justify focussing on competitive markets, and that citation infers that competitive markets must exist solely from firm size. I have discussed how bad such arguments are before. Even a textbook such as Chicago Price Theory does not claim that supply curves exist for markets that are not competitive.

What does the fact that such a prominent economist can make such a basic error tell us about the profession? I believe the main lesson is that much of the mathematics used in economics is simply performance. Despite the sometimes undue attention given to mathematical methods, the actual mathematics economists use often contradicts their economic conclusions. The mathematics in economics is simply a tool to keep out outsiders: economists themselves do not take it that seriously. Casey Mulligan would certainly have had to demonstrate some level of proficiency in mathematics in order to achieve his position, but the math is clearly irrelevant to his economic beliefs.

Critics of economics often argue for pluralism in economic teaching, or changes to the economics curriculum. While both of those things are important, I believe that the first demand should be something even more basic: competence. A shocking number of economics professors, particularly those who lean right, do not even understand the basic of the models they use on an intuitive level. If even a basic standard of competence were required from economics teachers a lot of the right wing nonsense that gets pedelled as economics would have much less support.

Perhaps, I am being rather harsh in this post. That is because I doubt Casey B. Mulligan will ever develop a good understanding of economics 101. He has clearly had professional success without it, and doing so would challenge his political beliefs. Of course, if professors like him correct their misunderstandings, and move towards correcting the research and teaching that is based on them we should not be unduly harsh.

4 thoughts on “Casey B. Mulligan and the Competency Problem in Economics

  1. I think this is very disingenuous to him – “supply” doesn’t necessarily mean “supply curve”. Certainly, any person working in industrial organization will tell you that imperfectly competitive firms have some notion of supply, even if it’s not the econ 101-version of supply curves.

    And even so, you can actually trace out supply curves for some imperfectly competitive firms as best responses.


    1. It is very misleading to use the same term for a precise mathematical definition of supply, and for a vague concept of “supply side factors” that is not made precise anywhere. In fact, the only time I have seen anyone use supply in the second sense is to avoid admitting they made a mistake.


  2. You realize he wrote that textbook, right? And he teaches the supply curve of monopolies and has published research on that specific topic, right?


    1. I would tend to think that if someone wrote a book they would know what is in it. Clearly his coauthors did most of the work. And the fact that he teaches is embarassing, not a point in his favour.


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